iTunes to get movie rentals, some DVDs to get FairPlay

A new report says movie rentals are coming to the iTunes Store. Apple, it …

The iTunes Store may soon satisfy users who are looking for alternative ways to buy and rent content. Though rumors of movie rentals have circulated for years, a hint at Apple's annual shareholder meeting in May and unofficial evidence found in September rekindled the flame. Now, less than a month before the annual Macworld event at which Apple traditionally announces new consumer products and services, a new report says movie rentals are on their way. As with previous iTunes Store forays into the video space, though, this offering could be met with mixed results.

According to Financial Times, a person "familiar with the situation" says Apple inked an agreement with FOX to provide its latest DVD releases to buy and rent from the iTunes Store. Currently, Disney is the only studio providing its new releases for sale. Movie rentals finally arriving in the leading digital distribution store could mark a major shift in the industry, and scoring FOX's catalog to headline the initiative is a big win for Apple. Movie rentals could also breathe new life into the promising but stuttering Apple TV. The announcement will reportedly be made at Macworld 08 next month.

Still, these extreme baby steps into video buying and renting spaces could be hurting the industry. Until consumers can go to one (or, ideally, multiple) services and find all the content from all the studios they want (DRM aside), outlets like the iTunes Store and Microsoft's Zune Marketplace will continue to confuse and put off the majority of consumers.

Though it would be reasonable to assume, there is no specific mention of Disney (in which Steve Jobs is a major shareholder and board member) offering rentals when this feature debuts. The prospect of movie rentals and higher prices must have been enough to reopen talks with other studios, however, as Sony, Paramount, and Warner Bros. are reportedly back at the negotiations table with Apple.

Confirming a previous Ars report, part of Apple's deal with FOX involves the studio offering a DVD that contains a FairPlay DRMed copy of the movie optimized for iTunes, iPods and iPhones. It is not specified whether the prices of iTunes-friendly DVDs will increase, but this is a brand new distribution method for both Apple and the studios. However, one studio exec's comment that the move should "help Apple sell a load more video iPods" is a testament to why Apple needs to start negotiating if it wants more iTunes Store content.

Steve Jobs may have stated in his open letter that iPods are selling just fine despite holding an average of 22 iTunes Store-bought items, but Apple's rise to number three in the US for media distribution (behind only Wal-Mart and Best Buy) and fierce competition for music, TV, and movie studios is finally forcing it to compromise with studio demands. First it agreed to a higher wholesale movie price of $15 from some of the studios, and now it finally is giving in to consumer and studio demand for more flexible ways to deliver iTunes Store content. If it wants to avoid any more NBC-like fiascos, Apple will need to continue playing ball with the studios to help stop industry fragmentation and consumer frustration.